Halverson's Times Interest Earned Ratio Was 2

question 78

Multiple Choice

Halverson's times interest earned ratio was 2.98 in 2014, 2.79 in 2013, and 2.31 in 2012. Which of the following statements about the ratio is possibly correct?

• A) The increasing ratio indicates decreasing levels of debt on which interest is incurred.
• B) The increasing ratio indicates the strategy of pursuing growth by investment in other companies, which has increased debt, but Halverson's profits have not yet increased from those investments.
• C)The increasing ratio implies increased long-term debt financing.
• D)The increasing ratio would be considered by creditors to be an indicator of higher risk.

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